Investments Pave the Way to Social and Environmental Solutions

03/29/2016 02:00 pm ETUpdated
Mar 29, 2017

When the trustees of Becker College mandated that all investments in the school's endowment should generate a positive impact on society and the environment, their decision was spurred by a longstanding desire to bring the institution's investment strategy in alignment with its mission.

Moreover, with Becker College's launch of a new social-business center affiliated with Nobel Peace Prize winner Muhammad Yunus, the opportunity for a 100-percent social impact endowment seemed like a natural next step. It's worth mentioning here that Prof. Yunus, who pioneered the concept of social business using microfinance, will be the featured speaker April 5 at the college's Presidential Speaker Series and the launch of the Yunus Social Business Centre @ Becker College, the first officially-sanctioned Yunus Centre in the United States. The mission of the college -- aimed at preparing graduates to lead in global society --played a strong role in garnering the designation.

Becker's mission combined with its core values inherently attracts students who value the entrepreneurial mindset and a commitment to social innovation. With students on campuses across the country petitioning their school's trustees to invest in more socially conscious ways, and given the reticence of many colleges on the subject of their investments, it is somewhat understandable why the story of Becker's lead on the endowment investment front got buried earlier this month. The big buzz in higher education in March revolved around the failings of schools to reveal their investments, particularly in the face of burgeoning student petitions.

Less sexy perhaps, but the truth: Becker's proactive investment decision was not the outcome of public shaming or arm twisting. Thankfully, the significance of the decision -- and the aggressive timetable, with a goal of June 2017 to complete the shift --was not lost on experts. Becker turned quite a few heads in investment circles. Consider the response by Georges Dyer, co-founder of Intentional Endowments Network, a Boston-based collaborative non-profit network launched to advance intentionally designed endowments with the goal of creating a healthy, just, and sustainable society:

"This quantitative goal of 100-percent social impact for a college endowment is the first of its kind, to our knowledge, and Becker's 2017 timeline shows a true dedication and commitment of its importance."

It is noteworthy that Mr. Dyer's organization recently announced the launch of a peer network designed to support endowment investment practices that address environmental, social, governance and sustainability factors in order to enhance financial returns and align with institutional mission and values. Founding members include nearly two-dozen higher-education institutions. Among them: Becker College, Hampshire College, Middlebury College, University of Maine and University of Massachusetts Foundation.

Becker's investment portfolio will be rated by HIP Investor, an impact ratings and firm which quantifies net benefit to society, future risk and financial return on nearly 5,000 global entities, 11,000 municipal bonds issued by governments and nonprofits, and nearly 1,000 mutual funds. HIP stands for Human Impact + Profit. It was developed by R. Paul Herman, who is the author of the business bestseller and text book, "The HIP Investor: Make Bigger Profits by Building a Better World."

We are pleased to also report that the new investment policy will permit Becker to evaluate investing up to 25 percent of its endowment in local opportunities, including student-founded and alumni-run ventures, or local energy-efficient infrastructure.

Pursuing both positive social impact and financial return is not only plausible. It is imperative. An eye-opening meta-studyInvestments Pave the Way to Social and Environmental Solutions last year conducted by Oxford University and Arabesque partners, "From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance," categorized 200 sources, including academic studies, industry reports, newspaper articles and books. It found companies with robust sustainability practices demonstrate better operational performance. This, of course, ultimately translates into cash flows.

Clearly, the approach to investing taken by past generations -- risking social, environmental and economic stability for short-term financial gain -- is not only unnecessary, but also unsustainable.

Science continuously presents compelling new evidence showing the toll of business-as-usual practices on society and the environment. The emission of greenhouse gases and release of vast amounts of toxic chemicals have placed the land and freshwater systems on this planet of 7.4 billion people in peril.

Scientists maintain that humans are "eating away at our own life support systems" at a rate unseen in the past 10,000 years. This is unacceptable. Millennials got the memo. So did the trustees at Becker College.

We urge others to join us as we intentionally push the envelope on endowment investing.